What is indexed universal life (IUL) insurance?
Indexed universal life insurance is permanent coverage combining a death benefit with cash value credited based on a market index, subject to a floor and a cap or participation rate set by the policy. It is not invested directly in the market, and values are not guaranteed. It suits people who want index-linked crediting.
Indexed universal life is a form of permanent life insurance that combines a death benefit with cash value that grows based on the performance of a market index, within limits set by the policy. It is not invested directly in the market.
Who needs it? People who want permanent coverage with flexible premiums. Those interested in index-linked crediting with a floor. People who understand and accept caps or participation rates in exchange for that floor.
IUL is more complex than other policies, so suitability is essential. The floor, often 0%, limits crediting on the downside while the cap or participation rate limits it on the upside. Policy costs affect cash value, and underfunding can put the policy at risk of lapse. We do not project returns, and values are not guaranteed.
How we help: We slow down and explain how the floor, cap, participation rate, and costs interact, so you understand the tradeoffs before you decide. We only recommend IUL when it suits your goals and budget, and we review it with you over time.
The crediting terms are not fixed for the life of the policy. Caps and participation rates are set by the insurer and can change within contractual limits, so the illustration you sign is a projection rather than a promise. Index crediting also generally excludes dividends paid by the companies in the index. The floor protects against a negative crediting year, not against charges continuing to come out of the policy.
